Oil falls to 3-week low as recovery fears mount

By Robert Gibbons

NEW YORK (BestGrowthStock) – U.S. crude oil prices fell a fifth straight day to a three-week low on Friday as bearish U.S. job data fanned fears of a double dip recession.

U.S. crude oil futures slipped 81 cents, or 1.11 percent, to settle at $72.14 a barrel, the weakest close since June 8. The $71.62 intraday low was the weakest since prices fell to $70.75 on June 8.

U.S. crude prices fell $6.72, or 8.52 percent, for the week the steepest decline since the week ending May 7, when prices sank more than $11, or nearly 13 percent as Europe’s debt crisis put markets in a swoon.

ICE Brent crude oil futures fell 69 cents, or 0.95 percent, to settle at $71.65, the weakest close since May 25.

Oil prices initially seesawed after the Labor Department reported U.S. nonfarm payrolls fell 125,000 in June, more than expected and the first 2010 decline.

But the report also showed the unemployment rate fell to 9.5 percent, from 9.7 percent in May. Jobs were expected to have fallen 110,000, according to a Reuters survey.

Adding to the anxiety about the economy, the government later reported U.S. factory products orders fell more than expected in May, the first decline in nine months and the steepest drop since March 2009.

The jobs report did show private sector jobs rose 83,000, less than forecast but more than May’s 33,000 tepid rise.

“With all the gloom and doom before the report you could say it wasn’t as bad as it could have been, but it’s probably not a positive for the economy and that’s the way the crude market is looking at it right now,” said Robert Yawger, senior vice president, energy futures at MF Global in New York.

“Demand could get hit a bit,” he added.

The weak U.S. dollar helped limit the initial decline after the employment numbers. The dollar slipped against the euro, extending Thursday’s steep losses. The dollar index (Read more about the global trade. ) (.DXY: ) fell 0.36 percent.

U.S. stocks (Read more about the stock market today. ) ended their choppy session lower as the jobs data underscored views the recovery is losing steam. (.N: )

Trading sources pointed to lighter trading volume ahead of the U.S. Independence Day holiday as a factor in the volatility. Trading volume for U.S. front-month crude was just above 235,000 in post-settlement trading.

Friday’s oil price slump came after prices fell more than 3 percent on Thursday, its biggest one-day slide in nearly four weeks, as weak manufacturing data from China and the United States fueled concerns the global economic recovery could stall and even slip back into recession.

In still another sign of bearish sentiment, money managers cut net long crude oil positions on the New York Mercantile Exchange in the week through Tuesday, the Commodity Futures Trading Commission said on Friday.

After prices surged on storm fears last week, Gulf of Mexico oil operations continued to restart on Friday after being shut as a precaution before Hurricane Alex hit Mexico.

(Additional reporting by Gene Ramos in New York, Alejandro Barbajosa in Singapore and Ikuko Kurahone in London; Editing by Sofina Mirza-Reid)

Oil falls to 3-week low as recovery fears mount